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(Xinhua)
Updated: 2008-02-14 16:06

A State Administration of Taxation (SAT) official dismissed market hearsay that the property tax levy was likely to start within the year, which the public reckoned to be an effective policy to curb property prices.

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The official also refuted previous reports as groundless that Beijing would start to collect the tax before June.

"The levy would not start in the near two years, since the property tax involves too many issues to be dealt with easily," Guangzhou Daily quoted the unnamed official as saying on Thursday.

The concern over an immediate implementation of the property tax started at the end of last year when Liu He, vice-minister of the Office of the Central Leading Group of Financial and Economic Affairs, estimated the levy would start in pilot areas in 2008.

The anticipation of the pending tax opened a crack in the property prices that seemed beyond reach of many ordinary salary earners. The country's leading property developer, Vanke Group, launched a massive promotion of housing sales this month that features discounts of up to five percent.

The preparation for introducing the property tax started early in 2003, as part of a systematic tax adjustment, and aimed to unify the current housing property tax, urban real estate tax, land value-added tax and land-leasing fees under a single name.

The tax was designed to be separated into smaller parts, which would be collected annually during the keeping of the house, and would be raised when the property prices go up.

If the land-leasing fees, which constituted a key component of property prices now, becomes unified into the property tax, which would be spread more evenly into 40 to 70 years after the purchase of the house, housing prices would be brought down significantly.

There has been no timetable set for the property tax levy. Although pilot areas of the program have been increased to 10, the reform still lacked conditions, according to the official.

"Now that the tax, financial and real estate departments are not completely connected, we cannot even effectively communicate our information through the network, let alone to levy a property tax that involves all the three systems," the official explained.